A declaration by a Chinese company that is interested in acquiring, investing in, and collaborating with, Israeli technology companies is an extraordinary event that undoubtedly raises hopes in this time of crisis. Chinese consumer electronics manufacturer Hisense Ltd. made just such an announcement last November.
Last week, Hisense took practical steps, when a top-level delegation arrived in Israel. Members included Hisense EVP business development Charlie Z. Wang, Hisense International CEO Dr, Lan Lin, Hisense Mobile Communication Technology general manager Wan-Lin Yang, and Hisense Electric general manager Gay-Jin Ghan. Their objective was to meet with dozens of Israeli technology companies to do business with them. The companies included Siano Mobile Silicon Ltd., modu Ltd., Discretix Ltd., and Red Bend Software Ltd.
Hisense, founded in 1969, is a well-known brand in China. Hisense had $7 billion in revenue in 2007, and it now seeks to expand from a domestic consumer electronics manufacturer into a leading global technology company.
In an exclusive interview with "Globes", Wang said that, following a strategic decision by Hisense's management, the delegation came to Israel to invest in, acquire, and link up with local companies.
Wang said, "We realized that in order to become an international company and compete against the big names, we needed to invest in significant technological innovations. The devices we make are our business, but we aim to become something like GE, which is an example of a manufacturer that used technological innovations to become a global leader whose brand is known everywhere."
Wang added that Hisense currently spends 5% of its budget on R&D. "We know that this is a low rate compared with companies like Microsoft and Intel. This is currently the right level for us, but I hope that, in future, we'll be able to increase our investment in R&D. We know that our path from being a domestic manufacturer to becoming an international innovative technology company is through R&D. We know that the way to move forward is not to develop everything alone. That's why we're now examining options worldwide in various fields, including in Israel."
Wang admits that Hisense identified Israel as a source of advanced technologies, but that he did not know how to operate here. He obtains help from the company's local distributor, Exit Telecom Ltd. Exit Telecom CEO Ofer Kedar is a director at Hisense. He carried out a preliminary sorting of 100 start-ups that expressed an interest in meeting the Hisense executives and demonstrating their wares.
"Globes": Why Israel?
Wang: "From a business perspective, we have a presence and business partner in Israel who can help us. We identified Israel as a country with a lot of intelligence, certainly compared with its size. There's a lot of breakthrough technology here, but mostly at small and mid-sized companies. It's necessary to know the domestic market in order to discover partners who suit us. One of the reasons for this visit was our wish to meet medical devices companies, especially those with MRI technology. We saw very interesting companies here."
Wang says that Hisense believes that the business potential is mutual. "Hisense can help Israeli companies gain access to the Chinese market. We can offer companies a partner with an excellent market positioning and manufacturing capacity, making penetration of the Chinese market possible."
What will your cooperation model be?
"For now, joint ventures seems to be the most suitable model. Invest a little in the technology and strongly leverage that through our manufacturing, marketing, and distribution capabilities. Israeli companies know well that competition in the US and Europe is tough. It's easier in China. For companies with breakthrough technologies, China has more potential and less competition."
Your visit takes place just at a time of crisis.
"We take the long view. It's impossible to wait for the crisis to pass, and then to begin work. Then, it will be too late."
Kedar says that Hisense plans to operate at two levels. "In the short term, to locate technologies that can be quickly integrated into the company's products, even within months. In the long term, we're seeking breakthrough technologies that can leverage Hisense's products, and turn it into a leading brand associated with great innovation."
Potential communications and IT solutions partners: Discretix, Siano Mobile Silicon, Red Bend Software, modu, Babylon Ltd. (TASE:BBYL), Celeno Communications Ltd., Cellular 3G Inc. Comsys Mobile Ltd., Fring Ltd., LocatioNet Ltd., Lumus Ltd., OriginGPS Ltd., Techtium Ltd.
Potential television partners: Amimon Inc., Horizon Semiconductors Ltd., Boxee TV Ltd., Infra-Com Technologies Ltd., Prime Sense Ltd., PeerTV Ltd., Santiaga Technologies Ltd., Unisonplay Ltd., Valens Semiconductor Ltd. Ltd., XTR (Extreme Reality) Ltd.
Potential medical devices and high-tech companies: Aspect Magnet Technologies Ltd., DeepBreeze Ltd., Edge Medical Devices Ltd., InRay Ltd., Medispec Ltd., Power Offer Electronics Ltd., Spectrum Dynamics Ltd., Orpak Industries (1983) Ltd. (AIM:ORPK),
Published by Globes [online], Israel business news - www.globes-online.com - on March 2, 2009
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